Proving a motorbike is for business use
Discussion
I'm hoping that this will be a quick reply.
I've been asked by my accountant, that they want proof that a motorbike that i bought last year, is for business use, rather than personal. Essentially they have told me that the bike is a 100% tax write off and anything associated to the use of the bike, can also be used as a tax deduction.
The bike is used solely for commuting to and from a place of work (this was the reason for the purchase)and it states that in my insurance docs. But all the docs i have, is linked to me, rather than the business name.
So V5 log book is in my name, the insurance is in my name. Only the invoice, which was handwritten by the private seller, states that this bike was bought by me "on behalf of Company Name".
I'm sure that i've read that only an invoice needs to be in the company name, to prove that this is a business vehicle.
The V5 form, doesn't prove ownership, only who is responsible for taxing etc.
In addition to this bike, i do have another one, which is used for pleasure or for anything else that is not business related.
Any views on this?
Thanks
I've been asked by my accountant, that they want proof that a motorbike that i bought last year, is for business use, rather than personal. Essentially they have told me that the bike is a 100% tax write off and anything associated to the use of the bike, can also be used as a tax deduction.
The bike is used solely for commuting to and from a place of work (this was the reason for the purchase)and it states that in my insurance docs. But all the docs i have, is linked to me, rather than the business name.
So V5 log book is in my name, the insurance is in my name. Only the invoice, which was handwritten by the private seller, states that this bike was bought by me "on behalf of Company Name".
I'm sure that i've read that only an invoice needs to be in the company name, to prove that this is a business vehicle.
The V5 form, doesn't prove ownership, only who is responsible for taxing etc.
In addition to this bike, i do have another one, which is used for pleasure or for anything else that is not business related.
Any views on this?
Thanks
I am in a similar situation, but my bike is solely used for work purposes - e.g. visiting sites, clients and the like. I don't believe you can claim if it's only for commuting.
You might like to have a rethink on how you use the bike...
Also, if it is uses for work, don't forget to claim for any protective gear you might need.
As for proof, I would have thought a log of the various visits you need to make, similar to a mileage claim, would be sufficient.
You might like to have a rethink on how you use the bike...
Also, if it is uses for work, don't forget to claim for any protective gear you might need.
As for proof, I would have thought a log of the various visits you need to make, similar to a mileage claim, would be sufficient.
Edited by Tribal Chestnut on Monday 23 February 14:43
Edited by Tribal Chestnut on Monday 23 February 14:44
An asset is only eligible for the 100% Annual Investment Allowance is the asset is 100% for business use.
If it is part business/part private, it will only be eligible for the Annual Allowance of 18% and the claim will also need to be apportioned between business and private use.
The "normal commute" will never qualify as a business journey.
If it is part business/part private, it will only be eligible for the Annual Allowance of 18% and the claim will also need to be apportioned between business and private use.
The "normal commute" will never qualify as a business journey.
_Deano said:
Thanks Eric.
Does that also hold true, if my primary location for work is my limited company address (which happens to be home). And because i'm a contractor, i need to travel to the office of the client, because they want me on site?
Thanks
If you're primary work location genuinely is your home, then you can class travel to other locations as 100% business use. But be prepared to have to prove this (as your accountant is asking you to, as no doubt HMRC will if they happen to look into it). So keep records - timesheets/diaries of where you worked when, in order to show that you do spend the majority of your time working from home.Does that also hold true, if my primary location for work is my limited company address (which happens to be home). And because i'm a contractor, i need to travel to the office of the client, because they want me on site?
Thanks
If your ltd company is registered at your home address, but all your work is actually contracting on clients sites, then you won't be able to claim the travel is 100% business use. Especially if you are on long term contracts. A week here, a few days there, and then somewhere else is fine, but months on end in one place is arguably a regular/primary place of work.
Eric Mc said:
The "normal commute" will never qualify as a business journey.
It seems that there was a change in 2010 which related specifically to motorbikes which appears to contradict that statement - which until yesterday I would have agreed with you 100% on ....http://www.theguardian.com/money/2010/may/15/tax-d...
.... but I'll be buggered if I can actually find it on HMRC's website.
sgrimshaw said:
Eric Mc said:
The "normal commute" will never qualify as a business journey.
It seems that there was a change in 2010 which related specifically to motorbikes which appears to contradict that statement - which until yesterday I would have agreed with you 100% on ....http://www.theguardian.com/money/2010/may/15/tax-d...
.... but I'll be buggered if I can actually find it on HMRC's website.
Eric Mc said:
An asset is only eligible for the 100% Annual Investment Allowance is the asset is 100% for business use.
If it is part business/part private, it will only be eligible for the Annual Allowance of 18% and the claim will also need to be apportioned between business and private use.
The "normal commute" will never qualify as a business journey.
That's not true Eric, you can claim the AIA on an asset with private use, you just restrict the claim in the same way you would with any other WDA.If it is part business/part private, it will only be eligible for the Annual Allowance of 18% and the claim will also need to be apportioned between business and private use.
The "normal commute" will never qualify as a business journey.
Agreed on the commute part though.
It seems it isn't very clear and many have been misled by the poor guidance - below is a quote from an accounting forum -
"I have to say that the guidance in the self employed notes to SA103 are less than helpful on this. The SEFN11 points out that you will need a separate pool where there is private use but none of the examples mention the AIA in these circumstances, only 18% WDA. Furthermore the worksheet on SEFN14 only mentions a 18% allowance as well so one might be forgiven for thinking that the AIA was not available.
The capital allowances manuals on the HMRC website don't seem to have anything on AIA at all which I find very odd. and unhelpful".
"I have to say that the guidance in the self employed notes to SA103 are less than helpful on this. The SEFN11 points out that you will need a separate pool where there is private use but none of the examples mention the AIA in these circumstances, only 18% WDA. Furthermore the worksheet on SEFN14 only mentions a 18% allowance as well so one might be forgiven for thinking that the AIA was not available.
The capital allowances manuals on the HMRC website don't seem to have anything on AIA at all which I find very odd. and unhelpful".
Eric Mc said:
It seems it isn't very clear and many have been misled by the poor guidance - below is a quote from an accounting forum -
"I have to say that the guidance in the self employed notes to SA103 are less than helpful on this. The SEFN11 points out that you will need a separate pool where there is private use but none of the examples mention the AIA in these circumstances, only 18% WDA. Furthermore the worksheet on SEFN14 only mentions a 18% allowance as well so one might be forgiven for thinking that the AIA was not available.
The capital allowances manuals on the HMRC website don't seem to have anything on AIA at all which I find very odd. and unhelpful".
Always dangerous to search for tax guidance on a forum (oh the irony!)"I have to say that the guidance in the self employed notes to SA103 are less than helpful on this. The SEFN11 points out that you will need a separate pool where there is private use but none of the examples mention the AIA in these circumstances, only 18% WDA. Furthermore the worksheet on SEFN14 only mentions a 18% allowance as well so one might be forgiven for thinking that the AIA was not available.
The capital allowances manuals on the HMRC website don't seem to have anything on AIA at all which I find very odd. and unhelpful".
That said, it's in my tax manual, and here it is on HMRC's website:
https://online.hmrc.gov.uk/information/help?helpca...
Also, I think you will need to declare a benefit in kind if there is any kind of personal use (like commuting to a regular place of work), not only on the value of the asset, but also the running costs (servicing, insurance, etc). You can reduce the BIK on a time available basis, but not apportion it by mileage use (AFAIK). So if you just used the motorbike for personal use at weekends you can reduce the BIK by 2/7. But presumably if you commute on it, then that's personal use pretty much every day.
Eric Mc said:
Do you have an actual Tax Act Section Number for that?
It's not that I doubt you but it is always good to know the specific section of tax law that formally states something. Even HMRC can get their own rules wrong in their general guidance.
A couple of snippets from my manual here Eric - the areas in bold being relevant. You won't find any legislation that says private use prevents an AIA claim. I looked into this some time ago, as I had a client whose van was his only vehicle and therefore had private use. (His wife had left, taking his car, kids etc...) It's not that I doubt you but it is always good to know the specific section of tax law that formally states something. Even HMRC can get their own rules wrong in their general guidance.
Annual investment allowance
An annual investment allowance (AIA) was introduced for the first £50,000 of a business’s expenditure on most plant and machinery where the expenditure was incurred on or after 6 April 2008. This limit was increased to £100,000 for expenditure incurred from 1 or 6 April 2010 (for corporation tax and income tax respectively) (FA 2010, s 5(1)). The allowance was reduced to £25,000 from April 2012 (FA 2011, s 11(2)), although a temporary increase in the limit to £250,000 was introduced for a two-year period from 1 January 2013. In a surprise move, however, Budget 2014 announced that the AIA would be increased to £500,000 from 1 April 2014 for corporation tax and 6 April 2014 for income tax purposes. This increased level of allowance will remain in place until 31 December 2015, when the AIA will revert to £25,000 annually (FA 2014, s 10).
The AIA applies to businesses regardless of size and can be applied to expenditure on long-life assets and integral features as well as on general plant and machinery, but not on cars. Expenditure over the AIA limit will be dealt with within the normal capital allowances regime.
The term ‘car’ was specifically defined, until April 2009, to include a motorcycle, so no AIAs were given for expenditure on motorcycles. However, the definition was amended, broadly from April 2009, to exclude a motorcycle (CAA 2001, s 268A). It follows, therefore, that AIAs are available for expenditure on motorcycles from (broadly) 6 April 2009.
Private use assets
There is a restriction in allowances if a sole trader or partner uses an asset partly for private use. Allowances are calculated and deducted from costs as normal, but only the business proportion of the allowances are allowed as a trading expense (CAA 2001, ss 205–208)
I know a few ltd company contractors who have a 'client' visit bike that the business treats like plant and equipment, with "PPE" treated as a legitimate business expense and a private fun bike, not owned by the company.
I'm sure that any decent accountant would ensure all the documented miles add up correctly and that the Client Visit Bike is only used for client visits, and the private fun bike never visits a client.
I'm sure that any decent accountant would ensure all the documented miles add up correctly and that the Client Visit Bike is only used for client visits, and the private fun bike never visits a client.
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